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IMCD NV
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Ladies and gentlemen, thank you for holding, and welcome to the Analyst Call Q1 2020 IMCD Results. [Operator Instructions] I would like to hand over the conference to Pieter van der Slikke. Go ahead, please, sir.
Yes. Thank you very much, and welcome everybody. As usual, I'm here with Hans Kooijmans, our CFO, and we will answer your questions in a few minutes. First, some remarks from my side, and then Hans will take you through the key financial numbers. When we spoke with each other on February 27, as we released our annual report 2019, the corona crisis was already there, but not yet in the unprecedented form we now experience. As you know, we as management of IMCD, we're always quite reluctant to give guidance on future profit development, and these events show again how fast and unpredictable things can happen. You will appreciate that under these circumstances, we are even less inclined to give an outlook. We already informed the market on April 7 that we did not observe a negative impact of the corona crisis in our Q1 results. These results are strong with revenue and EBITA growth in all regions. Overall, revenue grew with 6% and EBITA with 11% to EUR 70.9 million. Cash earnings per share increased with 13%. We cannot rule out that, in particular in March, stock building took place by part of our customer base which, in that case, had a positive effect on our numbers. However, we can't verify whether this actually has happened and to what effect. During March, largely in the second half, lockdowns and restrictions were implemented in almost all countries where IMCD is active. IMCD has been designated in most of these countries as essential, and our company, therefore, remains open for business. Of course, the health and safety of our staff is absolute priority, and we have adopted everywhere safe working practices. This means in practice that most of our people work from home. It is gratifying to see that this is made possible because of our robust IT and digital infrastructure. This situation continues for the time being, and only our colleagues in China are back in the office. We are very proud of our staff worldwide. They have reacted magnificently on this unprecedented crisis. IMCD has not applied for any financial assistance offered by government programs anywhere in the world nor do we intend to do so. Although Q1 was strong, we expect to see impact of the crisis in the coming months. In some of our business segments, a certain number of customers have closed or are affected by the crisis, leading to cancellation or postponement of orders. We monitor this closely day by day. We expect that this will affect our revenue. Other business segments do not experience this and even see increased demand. It is impossible to predict how these effects will develop as it is largely dependent on government policy regarding lockdowns. In this respect, we see also differences per country, and in some countries, government measures have been disruptive to the supply chain. Assuming that this crisis will not go on forever, we expect that we will get through this period with not too much harm, and we then hopefully can resume our growth path. IMCD is strong and resilient and its diversified activities prove this again. We at IMCD are committed to ensure the continuity of the business for the benefit of our employees, our commercial partners, our customers and our shareholders. Now Hans will take you through the Q1 numbers, and after that, we will answer your questions. Hans?
Thank you, Piet. Good morning, ladies and gentlemen. And as usual, a short summary of the first quarter results, whereby I would like to start off on Page 9 of the presentation. As mentioned by Piet, we are happy to report a 6% revenue and a 12% gross profit increase in the first quarter of this year. The gross profit increase was a combination of 7% organic growth and 5% as a result of the first time inclusion of acquired companies. Gross profit in percentage of revenue improved from 22.4% to 23.6%, and this increase in percentage was a combination of product mix effects, changes in local market circumstances, currency changes and gross margin improvement initiatives. Operating EBITA increased 11% to EUR 70.9 million. This increase was a combination of organic growth and the first time inclusion of acquisitions. The operating EBITA margin increased from 9% in the first quarter of 2019 to 9.5% in the same period this year. The conversion margin, calculated as operating EBITA in percentage of gross profit, was 40.2%, which is slightly lower than the same period last year. In EMEA, we had a conversion margin just below Q1 last year but much better than all other quarters in 2019. In Asia Pacific and the Americas, we were able to further improve this ratio. Net result before amortization and nonrecurring items increased 13% to EUR 15.2 million. Free cash flow and cash conversion ratio both decreased compared to the same period of last year. Substantial operating EBITA growth in 2020 could not fully compensate the increase in working capital in the first 3 months. This working capital investment of about EUR 36 million was mainly the result of increased business activities. Net working capital translated in days of revenues were 54 days, similar to the first quarter of last year. Year-to-date cash earnings per share were EUR 0.94, an increase of 13% compared to the same period of last year. And on the last line of this page, you could see a 9% increase in our number of employees. Most of this increase is the result of the first time inclusion of acquisitions. On the next page, Slide 12 -- Slide 10, you will find gross profit, EBITA and conversion margin per operating segment. EMEA reported 7% Forex-adjusted gross profit growth and 6% operating EBITA growth. Operating EBITA in percentage of revenue improved from 10.2% to 10.5%. The growth is a combination of organic growth and the impact of the acquisition of DCS and Zifroni. Further, Q1 includes a bit of start-up cost of our new venture in Dubai. In the second column, the results of Americas. In Q1, Americas increased gross profit and operating EBITA, both with 15%. Most of the growth is organic and amongst others, driven by an increased GM percentage. Asia Pacific in the third column reported 26% gross profit growth and 27% operating EBITA. This was a combination of organic growth and the first time inclusion of acquisitions. And operating EBITA in percentage of revenue was comparable with last year whereby the conversion margin further improved. And in the last column, you will find the cost of the holding companies, and as you know, this includes all nonoperating companies, including the head office in Rotterdam and the regional support offices in Singapore and the U.S. On Page 11, a short summary of IMCD's free cash flow. Free cash flow and cash conversion ratio were both lower than the same period last year as a result of the increased working capital investment, as indicated before. And as mentioned, this working capital investment is mainly the result of increased business activities. Days -- working capital translated in days of revenue remained stable. On Page 12, a short update on net debt and leverage. And for information purpose, we separated the IFRS 16 net debt, and as you can see, reported leverage ratios and leverage based on the definitions in the loan documentations stayed at 2.8x and 2.6x. The 2.6x leverage ratio is well below the lowest 3.5x leverage threshold in IMCD's loan documentation. And last but not least, on Page 14, you will find our outlook for 2020. So far, the short summary of our year-to-date financials, and Piet and myself are happy to answer your questions. So operator, you can open up the lines again.
[Operator Instructions] The first question is coming from Rajesh Kumar, HSBC Bank.
Just in terms of incremental discussions with your customers, what are the types of demand scenarios have you examined? Obviously, you are exposed to quite a lot of very defensive sectors as well, but there is a large segment of industrial exposure. I'm sure you must have had some discussions with your customers in terms of various outcomes in terms of economic growth in the second half of the year. If we could get some color, that would be very helpful. Second is just in terms of sourcing, have you had discussions with your suppliers and customers about the level of inventory they require you to hold to assure them of some supply continuity?
Great. Thank you, Rajesh. On your first question -- this is Piet. On your first question with respect to customers, of course, as you indicated yourself, it's a wide area. It is clear that -- and we're talking now about the current situation, not on -- let's say, not on the first 2 months. It is clear that, of course, certain customers have either closed or are postponing orders depending on the local situation, in particular, the industries that are obvious, like, in our case, the coatings, construction, advanced materials. Industries that have a link to the automotive sector have, of course, all these issues of lower demand or even closure. So there, we will see the effects of that. On the other hand, of course, in the other segments, like pharmaceuticals, food and, to a certain extent, also in personal care, but to a lesser extent, I would say, because also there we see here and there closures. We see, of course, increased demand. And so various wishes of customers, various situations of customers, and that's also what I indicated in my introduction. As to sourcing, our discussions with suppliers, I would say that, by and large, there's no difference in terms of what -- of our relationships with what it was before. Also here, of course, you have supply the -- who have full demand and are producing full capacity and others that are not. So in particular, with those who are full capacity, we are discussing how to -- about lead times, et cetera. But also here, differences in the way we interact with our suppliers. I hope this gives you some color.
Absolutely. This is very helpful. Just when you look at your portfolio of customer exposure. So just you said, about 55% or something like that are industrial customers, 45% is pharma and food. So then if you look at the exposure and the relative growth rates, I know you don't like to give a forecast, and this time, especially, it's more difficult. But just in terms of looking forward, are you comfortable with where the market expectations are coming out at the moment? Or do you think people are still too optimistic?
I'm not sure what you referred to and what kind of expectations. And of course -- and that's the difficulty, Rajesh, is how long will this, let's say, lockdown situation in the various countries take place and how much easing of that will take place. And I think if you look at the various countries, then we see different outcomes also, but there are certain areas where the restrictions have been becoming a little bit more less. And I think the announcements have come in today also with certain countries. So it depends very, very much on how fast countries will ease the restrictions. And if this takes 1 or 2 months, yes, then we will notice that, but I think that the harm is very relative. But I think -- you and I don't know how fast we're going back to opening up, as people call this, the economy. And that makes it, for all of us, I would say, impossible to predict. Other than that, we also work in many industries that are open now. So that is then a positive. But I find it very, very difficult to predict what the next coming -- how fast economies are opening up. I think if you look at certain countries like China, we see activities increase quickly, but that is, of course, for us, not a, let's say, major country in our portfolio. Other countries that are very restrictive, we see absolutely reduction in activity. So it is -- it's a very mixed picture and impossible to predict how fast we're back on track, but I'm not very pessimistic if I hear the sounds of governments and -- that we see the next 2 months, May, June, resumption of activities.
The next question is from Peter Olofsen, Kepler Cheuvreux.
My first question is on the Americas, where your gross profit growth and gross margin was pretty strong. You mentioned a couple of factors, including product mix. To what extent is this the typical quarterly fluctuation in demand and mix? Or is there a structural element where you have been able to win new distribution rights, have been able to add new products to your portfolio which has been helping your overall mix? And then a question on working capital overall for the first quarter in terms of number of days. It's pretty stable versus Q1 last year. But looking specifically at inventories and receivables, have you seen any weakening there in recent weeks, where maybe it's become a bit more difficult to collect receivables or areas where you have seen some more buildup of inventories?
Yes. Peter, your remarks, your question on the Americas, I think you're right. It is a mix effect that we see there. We see also an effect of putting E.T. Horn into our global Americas organization, so some more visibility that helps us. And also there, a small change in also relative to E.T. Horn in the way we account. But -- so it's various factors, but I think we are positive about direction of the margin and that is, of course, also something that we really focus on. On working capital, I think that all of us are confronted in the economy with customers that will -- have struggled or asked for extended payment terms. I think IMCD has been very strict. We pay in time to our suppliers and we also expect payment in time for -- from our customers. We will have to see how that develops, but it's obvious that, of course, this is a important point of attention, as are the inventories, as some of our supplies are also on full capacity. Has this given you a view?
Yes. So basically, it's not that it has dramatically weakened inventory turnover or DSO in recent weeks?
No. No. No, right answer, no. Maybe if we talk about exactly the same days when you translated in days of revenue.
And just going back on your answer on the Americas, there's a product mix, it's -- they're not fully clear whether this is just the normal volatility or fluctuations that you have from quarter-to-quarter or whether there is a structural element to that improved product mix. Is there a meaningful contribution from new products that have been added to the portfolio or new distribution rights that you have secured?
Well, we have to see how, let's say, the volatility issue or the mix issue has played a role in this. It certainly has because we see in certain segments, of course, increased demand and in others a bit less. But again, it's also part focus of the organization, but it's a bit early to say. So let's see what the next quarters will bring. We certainly -- if situation goes back to normal, we probably will see maybe a slight reduction, but we will see. We will see.
Then my final question on Asia Pacific, which seems to have had quite robust organic growth in the first quarter. Were there particular countries or end markets that drove that growth?
Peter, I'll answer here. I think it's fair to say that, as Piet indicated before, we have, of course, a bit of a China impact in this region, but China is pretty small that had a very weak first quarter. But other than that, most of the companies performed positive.
So the growth is quite robust.
Yes. Yes.
The next question is from Mutlu Gundogan, ABN AMRO.
Yes, and thank you for bringing the results forward. A few questions, which I'd like to ask one by one. First, on your gross profit. You indicate that gross profit growth was 7% over the quarter. Can you share with us how the development was per month in the first quarter?
No. I don't think so. No. No.
I'll take it.
No. No. And before you know, we started talking about weeks and working days and things like that, and I already hate to talk about quarters. And quite frankly, I don't even know at this moment. I mean, I have to look at that. But I don't -- if you want to, let's say, infer that it suddenly spiked, then I can say no in this quarter.
Okay. That was actually what I was getting at. And then, yes, the million dollar question. I mean, Q2, I know you don't want to talk about current trading and you see pluses and minuses within your wide range of activities. So the net effect, I mean, I assume that is negative. I mean can you at least confirm that you're seeing a negative organic gross profit growth so far in April?
Let's say, if you look at the positive effects that I indicated and the negative effects, then the negative effects, how you say, are stronger than positive ones.
Yes. Okay. And then, yes, as you said a few times and I fully agree, I mean, no one knows what's going to happen. So maybe it's an idea to talk about scenarios. So do you have various scenarios in place and your response to, let's say, a significant downturn in the economy? I mean, if we look back at '08, '09, I know that you were able to offset a large part of your organic gross profit decline. I mean how are you looking at -- I mean, obviously, your business mix has changed. You're now in the Americas. So what kind of mitigating actions can you take? Have you started taking to offset any negative organic gross profit growth?
Yes. We have, of course, the usual -- let's say, on the cost side of our business, we have the, let's say, prudence in recruitment. So we won't do that when -- unless absolutely necessary. We are not a company that would easily take drastic measures in cost cutting in personnel. I think our people have done, again, as I said, fantastic, and we rely on them. And they are -- we are one team and we will get through this. We have, of course, other operating costs like travel that we have all -- I think we all experience that we need -- that we can travel less. So that will save us. Other than that, there's not a lot that we can do or should do to overcome this. And it's, of course, clear that if the economy stays close for another year, and then all of us are in a totally new situation. But if this is a temporary thing, then I'm pretty confident that we will get through this in good shape. And so very, very drastic measures are absolutely not in our scenarios. We have made scenarios. These scenarios are also quite drastic in the sense of the downturn that we have modeled, and we still feel comfortable and confident that we will also overcome that.
That's good to hear. A final question on those scenarios. I mean, what kind of organic gross profit growth can you take, so to say, or can you offset with lower costs before you start to see an organic EBITA decline?
That is -- Mutlu, the nice thing of creating all kind of excel sheets with forecast and models is that you can put in a lot of variables, and we play, of course, with what will happen to revenue growth or decrease, what will happen to the gross margin percentage. The good news is that our third-party cost as we outsource most are variable cost for us. What will happen to the cost structure, what Piet said before, we are not in a mood to fire people or to scale down organizations. But for sure, there is some flexibility in there, thinking, for instance, about bonus cost, travel, PR exhibitions and so on and so forth. And what Piet said before, we can take quite an enormous hit before we run into real difficulty there.
The next question is from Mr. Steven Goulden, Deutsche Bank.
So just 3 questions from me. Firstly, can you tell us what underlying volume growth was roughly? I mean if I'm just backing out the impacts of the margins on organic GP, obviously, there's a number of moving parts, but roughly, it looks like volumes were kind of flattish. Is that basically sensible?
Yes. We can -- let's say, we look at it. But -- no, I would even say we don't look at it because, I mean, if we look, for example, in our general chemical departments, which are a bit more volume type of products, then we see, of course, there are more decline than elsewhere in pharma or in -- with much less volume. So it doesn't say us a lot, to be honest. So I wouldn't look at that as an indicator for our business.
And on -- so second question would be, obviously, the conversion margins were, but pretty flattish year-over-year. I mean, given that the gross profit growth was kind of largely margin driven, so we'd expect a reasonably high drop-through, is there any reason for this? Were there other costs maybe that you saw such as having to use more airfreight, for example, or anything else? I'm just wondering why we didn't see more of an impact at the conversion margin level.
No. I think that is a valid question, Steve. I think if you look at the cost base that we show, we show quite a prudent number here. You will see the full year impact of people that we added to the organization in the course of last year. If you look at the outcome, of course, we provided for things like full bonuses and these type of things. And then there are the usual swings in -- if you look at third-party cost, in a lot of cases, we discuss with customers we will take care of transport. We will pay for it and we had answered on the P&L lines. So I think the good news here is that if you look at the EBITA margin, which is internally a more important indicator than conversion ratio, you see improvement on the EBITA percentage and percentage of revenue.
Okay. Sure. Sorry, just to clarify, on those third-party customer, you're saying it just -- it very much depends contract by contract who takes those? Or are you saying that that's often the problem of the end customer?
No. No. We have a lot of customers full transparency about -- of our transportation cost as part of the cost price. And in some cases, we also leave to customers if they want to decide to pick it up themselves or if we deliver to them. And of course, these type -- these are the usual fluctuations that we see in a quarter that every now and then, it's more efficient for them to pick it themselves. And then you see just changes in where it ends up in my P&L lines. And therefore, it sounds early perhaps, but conversion margin is a ratio where, internally, we don't look at. We look at own cost versus added value, and then added value is the margin after transportation cost. And there, we see an improvement in Q1 versus last year, and that is reflected in the outside world in operating EBITA margin improving compared to last year.
Right. Okay. Okay. That's helpful. And just last question for me. You said at the start of the call that you did -- you had no intention to use government wage support schemes. Can you -- I mean, if things clearly do slow and you're seeing significantly lower volumes, might that decision change? And why is there clearly no intention at this point. Is it just to do with dividends or potential government interference in the business later on and after the crisis? Can you just give us a bit more color there?
Yes. It's a good question. I think, first of all, of course, we don't need it. Secondly, I think that as long as you are able to keep your own pants up, then you should do that. As a matter -- for me and for us, as management, it's a matter of principle also. I think that there are -- somewhere in the world, not in the Netherlands, but somewhere in the world, possibilities, but we don't do that. And listen, if the world falls down or the sky falls down, then we have to look at that again. But I think that if we get into these problems and I think many, many -- almost everybody else as well. So I don't think that's a likely scenario. My feeling is as long as you are able as a private company to finance your own business, then you should do that. And I think that's an important principle because that's why we are private companies. And yes, that will also, of course, enable us to do what we intend to do with our business dividends and what have you.
The next question is from Matthew Yates, Bank of America.
I've got a couple, please. The first is just a practical question. In terms of -- you said most of your staff are able to work from home. Is there any impact on the business from less access to the formulation labs, not having the customers there? And how long would it take for that to come through into less revenue opportunities? The second question is just around the balance sheet. Obviously, last month, you proactively increased and lengthened the size of your facility. Was that done with something in mind in terms of an opportunity you think there is to put capital to work?
The first question, Matthew, is on labs. We have here and there still labs that are operational in the sense that people work in these labs, but with the prudent distance or in shifts. And -- but it is -- it's, of course, true that, let's say, the things that we do in these labs and also customer seminars and, et cetera, have not taken place. What we have increased is webinars, formulation gatherings, digital, et cetera. So we try to, let's say, replace that with digital means. And I think so far, it's going well. On the balance sheet, I think what I can say is that we did this, of course, prior to the crisis that this started -- this refinancing prior to the crisis. And yes, we continue to look for opportunities, but it has not been done with something very specific in mind. Now although it was creating more flexibility in the balance sheet, making use of lower interest options to reduce the interest margins that we pay to the banks, and we like to have a bit of flexibility there.
And while I've got the chance, so I just squeeze one more in. I think you talked about opening up an office in Dubai. Can you just remind me what your Middle East footprint is today?
Well, it's very limited. We have a business in Egypt, which is, by the way, it's growing. It's growing very nicely. And we -- other than that...
Israel?
Israel since a couple of months, but we are not in the -- active in the Gulf region. So that's why we opened this. We get a lot of requests also from our suppliers. We will -- we have started in pharma now in the region, both in Egypt and the Gulf. We will expand that also to other segments. And so it's a small footprint but growing.
The next question is from Quirijn Mulder, ING.
Yes. Piet, maybe a question on the gross margin and EBIT in EMEA [ you ] reported, gross margin was up by EUR 5 million, EBIT only by EUR 1 million. Probably that is related to Dubai. But I think it's not the full reason. If I take also into account that your integration of Velox started last -- started last year, and it is probably not finished. So can you give me -- can you give me some indication about how the development is there? And what is the reason for the -- let me say, that the gross margin was not [ followed ] by the EBITA margin?
In absolute numbers, yes. So I try to say that in more general terms on one of the previous questions, because then your next question could be how is it then possible that your operating EBIT margin in percentage of revenue goes up. But you now also need to look at the lines in between, and that is third-party cost, wages or salaries provisions for doubtful debtors and so on and so forth on the operating income. So what we see in EMEA is, on the one hand, we benefit from, what you rightly said, cost savings as a result of the integration of Velox. At the same time, we added a few acquisitions. We added staff during the year last year. We did full bonus provisions and other things. There were some changes between how we present things on gross margin and on third-party cost just due to operational changes as a result of the integration of the Velox activities, and that all played a role on how the numbers in Q1 came out.
Okay. Okay. And with regard to the Far East, is it correct to assume that the organic growth was about 15% in the first quarter?
Yes. We don't give a split in the quarters in the regions between organic and M&A. But what we have on the M&A side in Q1 in Asia Pacific is, for sure, the Whawon acquisition, a pharma business that did pretty well in the first quarter. And we had some activities in India and Singapore for the first time in the numbers. I don't know out of the top of my head, Quirijn, the split between organic and acquisitions, but we had a substantial organic growth as well in those region.
The next question is from Edward Donoghue, oneinvest.
A few on my side, if possible. I apologize if I missed the opening presentation comments. I was a bit late getting in. Could you just talk about the trends during the quarter with regard to order frequency and any particular divergence within the various sectors that you alluded to earlier in the presentation? Just to get an idea of how you were sort of exiting the quarter. And I know you don't like to give detail, detail, but some sort of momentum would be useful to know.
Well, it's obvious, of course, that, let's say, during the quarter, there were changes. I mean we started normal as we all did in January, to a large extent, also in February, with the exception of China, where, of course, then the business more or less stopped more or less equal to Chinese New Year, and it didn't resume. And I think in March, we saw everywhere or in many places, in Europe, first and foremost, in Italy, of course, a lockdown situation. Strangely enough, or maybe also thanks to the creativity of the Italians, business went on from home. We had a very, very good result also in Italy. And yes, what I said in my introduction was that it is possible, but very difficult to verify for us that in the last month of this quarter, also some stock building took place, which means increased orders. We saw, of course, in the United States, later in the month, also, the COVID crisis having an effect, closure of businesses. And I think that -- let's say, the fuller implications will be felt in the next 1 or 2 months. So yes -- and differences, of course, as I said, also in the introduction on the more industrial businesses and the more life science businesses, which showed very good activity.
Okay. And then just going back to your point earlier, you were talking about, on a question, scenario planning. Assuming -- I mean, I'm just making this up, but you have scenarios 1 to 5 of level of intensity. I mean, are you staying within the parameters of the early scenarios, i.e., the less drastic? I mean, looking at the numbers so far would imply you're at the lower end of a scenario planning. Are they staying with what -- within what you would have expected? Or are you seeing actually divergences plus or minus within that scenario?
No. I think that we will stay within, let's say, the scenarios that you indicate. So I think that even in a more drastic situation, we will continue in the way we do.
Okay. And then just a final question. If you look -- and just you made a comment on personal care. Was that, again, something that you expected a slightly better performance coming out of that area or what?
Well, the performance is still very satisfactory. But I think we all saw that some of the manufacturers have closed in certain countries, I think, in particular in the makeup industry. And secondly, that has to do with demand. And China is an important -- a market also for products that are produced elsewhere, in particular also Europe, and then markets also decreased. So that is also an effect that you will see, and that is what happened. Notwithstanding that, we still have, let's say, good results in that segment. But it's a segment that is, let's say, a bit more vulnerable for demand and also in this particular crisis than the other life science segments.
And just on that life science, did you have the ability to scale up as the demand rose?
Yes.
Okay. So no bottleneck issues there at all.
No. No.
Okay. I'm going to be very greedy and take a last question, I promise this is. Everyone talks about the situation with a virus, which is logical. But could you just give an idea of how -- I know you just said January, February were okay, but how are they tracking versus budget planning put in the end of last year, just to get an idea of the upside and positives -- as a positive note?
Yes. But what I don't want to do is now trying to split the months -- the quarter in months. We're doing it -- we were doing okay and the whole quarter has been okay. So let's keep it with that.
The next question is from [ Hakken Eliana, APGAM ].
Yes. Can you hear me?
Yes. Okay.
Super. Yes, most of my questions have been answered, but I have just 2 left. The first one is if you could please confirm to me what was your cash position at the end of the quarter and your RCF utilization, and if that has changed a lot through the first 3, 4 weeks of April, please? That would be my first question.
I think what you can see on the leverage levels that we report, that the cash position should be more or less similar as what we reported at year-end. And your next question is what happened in the first 2 months of this -- the first 2 weeks of...
No. No. No. Yes. Well, basically you're talking about then you had like EUR 100 million cash position at the end of the first quarter. And what is the utilization of the revolver at the end of the first quarter and if that changed a lot during the first 3 weeks of April?
No. There were no major changes there, and I think that is reflected in the number of working capital days and the leverage levels that we disclosed.
And what was the RCF utilization, please?
Yes. I don't think we are debt specific in the press releases. I think if you look back at our annual accounts last year, I think we had -- we reported there an undrawn position of around about EUR 200 million. We added EUR 100 million, and then I think it's easy to do the math.
Okay. And in that same line, now that the economic environment has turned a lot more uncertain, have you considered substituting the reliance of -- on RCF from some more long-term debt?
No. Sorry, I missed your question there, to be honest. If you look at the loan structure that we have in place, we have a combination of long-term debt and RCFs. We created a bit more flexibility in the loan structure by adding RCFs, and for sure, the long-term debts are fully drawn because it's a -- everybody's a bit [ shortchange ], it's the standard steps that we have in the market and the only flexibility that you then have is on the RCF.
Yes. Well, basically, that's the question. If you have considered to substitute RCF from -- with another bond potentially.
There is no need to make the change at the moment.
Yes. And my last question would be on M&A. I know it's like a core part of your strategy. Is there a project that we can -- that you have in mind this year of transactions where the due diligence is already quite in a late stage?
Yes. Well, I don't want to give specifics on that, but we are -- as we always say, we have a pipeline of possibilities. We are working on some of them. It's also clear that some of the others are, let's say, hampered by this crisis because sometimes you need to travel also. So some of them will be postponed. Some of them, we will continue.
[Operator Instructions] There's an additional question coming up from Quirijn Mulder, ING.
Yes. Nice. And on last year, first quarter was quite strong related to, in my view, the Brexit, for example, as that was originally planned for the 29th of March. And then you say, you had an idea about there was some stock building then. This time, it looks like that you are not so certain about stock building, and it has probably to do with your policy to be very carefully operating with regard to certain clients. Can you give me an indication about the whole story with regard to the stock building?
Quirijn, it's very difficult. I mean, if you have 40,000, 50,000 customers, you cannot look behind their warehouses and see how much stock they have. It's impossible. So it's not unwillingness, but it's just impossible to do that, and then this is all across the world in all kinds of different market segments. And we can't see that in countries like -- and you refer now to the U.K. That's one country with a very specific set of circumstances. We had a bit of a more of a feeling, but now generally, over all these markets in all these different regions, it's very, very difficult for us to understand that. If we see, of course, in certain segments significant growth, then that is a little bit our deduction, but it is not something that we can verify.
Okay. So this deduction and not -- let me say there's not a real proof of that stock building?
No.
[Operator Instructions] Gentlemen, there are no further questions at this moment. Please proceed.
Thank you. Then I wish you -- yes, sorry, I have to close. Thank you all very much. I hope you stay healthy. And I speak to you -- we speak to you next time. So enjoy the sun. Goodbye.
This concludes the IMCD Event Call. Thank you for attending, and you may disconnect your line now.